I just had the oddest conversation with my boss. He asked, “How would you like to own your own business? Be your own boss?”
It took me a minute to realize he was serious, and then I asked, “What’s the catch?”
“There isn’t one,” he said. “If you become a franchisee, you and I can create a business-to-business relationship. That will be a win for you, and a win for me.”
“How’s that?” I asked.
“I’ll guarantee your new business work from my business. I’ll be a subsidy client for you, and you can branch out from there. For me, it will lower my payroll expenses. But the big win will be yours.”
He acted like I should be thrilled, that we should break out the champagne and celebrate. He then gave me franchise paperwork to sign and a list of Internet websites that I could use to set up my business.
So, what’s the catch he isn’t telling me about?
Your boss wants to lower his payroll costs. While he presents this strategy to you as a win-win, and it may be if you’ve always longed to run your own business, think long and hard before you accept. Once you become a franchise owner, you lose standard employee protections, such as overtime and safety protections.
Unless you and your former boss radically change how you work together, this paper façade can burn up in a heartbeat. The U.S. Department of Labor investigates franchises and when they learn that employees one day become LLC owners the next day, they go after the employers for penalties and damages and explain to the new LLC “owners” that they’re employees but have been without wage or safety protection. Further, if your new business has safety or other problems, you’ll be on your own.
At the same time, if you want your own business and fully embrace this new challenge, your boss’s offer gives you a head start.
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